Carpenter Announces Strategic Initiatives

-- Accelerated growth in certain core markets, in particular aerospace, medical, and energy, resulting in a greater mix of higher value materials and products

-- Profitable growth through complementary acquisitions that can be quickly integrated

-- Establishment of a share repurchase program

-- More competitive dividend

These actions will be consistent with Carpenter's financialdiscipline and its stated financial objectives.

The Company has previously committed to, at a minimum:

-- Sales growth of 5%

-- Operating margin of 12%

-- Return on Net Assets of 10%

-- Debt-to-Capital of 35% or less

-- Economic Profit

"Our success over the last few years has been achieved by focusingon operational excellence and by investing capital with greaterfinancial discipline," said Robert J. Torcolini, chairman, presidentand chief executive officer. "Through a comprehensive review processled by Carpenter's Vice Chairman Mike Fitzpatrick, we have identifiedsignificant growth opportunities close to our core business. Ourstrong financial position will allow us to grow profitably,organically and through acquisitions while at the same time providingour shareholders with increased cash returns through dividends andshare repurchases."

Organic Growth

At the heart of the Company's strategy is its plan to build on itscore business in four attractive and fast growing end-use markets:aerospace, medical, energy, and high value segments of automotive.These markets require high performance products made to exactingspecifications that cannot be easily substituted. Typically, Carpenteris one of a few companies worldwide that is able to supply thesetechnically demanding materials and products. Today, sales ofCarpenter products into these four markets represent approximately 55percent, or $875 million, of the Company's fiscal 2006 revenue. As aresult of the strategic review process, Carpenter believes thatapproximately $500 million of organic growth opportunities in itshighest margin businesses exist in these markets over the next fouryears.

In the aerospace market, commercial aircraft build rates areforecast to increase, on average, 10% annually through 2011. Airbusand Boeing have five years of production on their order books. Thesestrong order patterns are coming primarily from Middle Eastern andAsian airlines and regional and low cost airlines in the United Statesand Europe. The major United States and European airlines are alsoexpected to begin replacing a greater percentage of their fleetsduring this period, which would further strengthen demand.

Many of the new, lighter, more fuel efficient aircraft will usesignificantly more titanium for their airframes than current modelsand will require more of the high temperature superalloys thatCarpenter specializes in for the new generation of high performanceengines.

The medical products market is also set for strong growth, whichwill generate increasing demand for Carpenter's titanium, CCM (cobalt/ chrome / molybdenum), and specialty stainless products. These highperformance materials are used in medical implants, surgicalinstruments, and other critical medical applications.

In the United States and Europe, the population entering itssixties carries an expectation of additional years of activelifestyles and, in many cases, a preference for joint replacementrather than reduced mobility. A better standard of living in Asia isalso generating demand for the latest health care advances. Carpentercontinues to develop new alloys and products to meet the growingdemand of these technology advances.

Growth rates in the aerospace and medical markets are expected tobe greater than 10%, on average, over the next four years. The Companybelieves this robust activity will generate increased demand for itshighest margin products, including nickel-based alloys and titanium,in excess of those growth rates.

To capitalize on these opportunities, Carpenter plans to investapproximately $200 million in capital expenditures over the next fouryears, which will include additional premium melt capacity.Additionally, the company will increase its focus on key end-usemarkets and place a greater emphasis on research and development.

Recently, Carpenter modernized two previously idledelectro-slag-remelting ("ESR") furnaces to increase the production ofpremium melt products. Carpenter is also currently installing twoadditional vacuum arc remelting ("VAR") furnaces that are expected tobe operational by December 2006 and will augment its 17 existingfurnaces.

The ESR and VAR furnaces are used in the production of highermargin products for critical end product applications such as rotatingaircraft engine parts, high performance automotive and truck engineparts, and medical devices. These investments are in addition to thenearly $500 million of prior capital spending made between 1997 and2002.

Growth Through Acquisitions

In addition to organic growth, Carpenter will seek to acquirecompanies that sell into high growth markets including, but notlimited to, the aerospace, medical, energy and automotive and, whichprovide a strong fit with the Company's expertise in high performancematerials. In addition, the Company will seek opportunities to expandits geographic base.

Carpenter's priority will be acquisitions close to its corebusinesses and markets that can make an immediate and meaningfulcontribution to Carpenter's operating income.

In maintaining Carpenter's financial discipline, acquiredcompanies will be expected to:

-- Generate earnings that will exceed Carpenter's cost of capital

-- Generate earnings that are accretive to earnings per share in year one

Transactions will be structured in a manner that maintains aninvestment grade debt rating.

Share Repurchase Program

As part of the company's strategy to enhance TSR, the Board ofDirectors has authorized a share repurchase program of up to $250million of Carpenter's outstanding common stock. The share repurchaseprogram reaffirms management's view that Carpenter's stock is anattractive investment based on its strategic initiatives and expectedgrowth in earnings and cash flow.

The repurchases will occur at such times and at such prices as themanagement of the Company determines. The share repurchase programwill be funded with the Company's excess cash after givingconsideration to capital investments, acquisitions and future cashflows. It is expected that the authorization will be utilized over thenext 12-18 months, subject to market conditions.

Dividend Increase

Another element of Carpenter's TSR strategy is its dividend rate,which was reflected in the 50% increase in the company's quarterlycash dividend that was announced on August 24, 2006. Carpenter's newannualized dividend is $0.90 per share of common stock.

Torcolini added, "Over the last several years, we have transformedCarpenter into a company producing and distributing higher valueproducts. At the same time, we have lowered our cost structure tofurther enhance our overall competitiveness throughout the businesscycle. Carpenter expects to continue generating returns in excess ofits cost of capital, and combined with strong cash flows, is in aposition to further reward shareholders with this increased dividend."

The company intends to maintain a dividend that delivers a returnto shareholders competitive with that of other materials stocks andrelevant indices. Future dividend increases will be made at a measuredpace, consistent with business conditions.

There are a number of factors that the Company will consider indetermining the size of future dividend increases and sharerepurchases. It is critical that the Company maintains its strong andflexible financial position in order to ensure that regardless of thestage of the business cycle, it will be able to:

-- Continue the research, development, and introduction of new products

-- Continue to identify and make acquisitions that meet its financial criteria

-- Make key investments, capital expenditures and pursue other activities to achieve its long term profitability.

Torcolini concluded, "Carpenter recently achieved severalmilestones, including another record fiscal year and a fourth quarterthat surpassed last year's fourth quarter earnings by more than 40percent. We are excited about the growth prospects in our core marketsand we are confident in our ability to capture opportunities whichwill enable us to continue to profitably grow our Company and tocontinue to reward our shareholders."

Carpenter produces and distributes specialty alloys, includingstainless steels, titanium alloys, and superalloys, and variousengineered products. Information about Carpenter can be found on theInternet at www.cartech.com.

Except for historical information, all other information in thisnews release consists of forward-looking statements within the meaningof the Private Securities Litigation Act of 1995. Theseforward-looking statements are subject to risks and uncertainties thatcould cause actual results to differ from those projected, anticipatedor implied. The most significant of these uncertainties are describedin Carpenter's filings with the Securities and Exchange Commissionincluding its annual report on Form 10-K for the year ended June 30,2006, and the exhibits attached to those filings. They include but arenot limited to: 1) the cyclical nature of the specialty materialsbusiness and certain end-use markets, including aerospace, industrial,automotive, consumer, medical, and energy including power generation,or other influences on Carpenter's business such as new competitors,the consolidation of customers, and suppliers or the transfer ofmanufacturing capacity from the United States to foreign countries; 2)the ability of Carpenter to achieve cost savings, productivityimprovements or process changes; 3) the ability to recoup increases inthe cost of energy and raw materials or other factors; 4) domestic andforeign excess manufacturing capacity for certain metals; 5)fluctuations in currency exchange rates; 6) the degree of success ofgovernment trade actions; 7) the valuation of the assets andliabilities in Carpenter's pension trusts and the accounting forpension plans; 8) possible labor disputes or work stoppages; 9) thepotential that our customers may substitute alternate materials oradopt different manufacturing practices that replace or limit thesuitability of our products; and 10) the ability to successfullyacquire and integrate acquisitions. Any of these factors could have anadverse and/or fluctuating effect on Carpenter's results ofoperations. The forward-looking statements in this document areintended to be subject to the safe harbor protection provided bySection 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. Carpenterundertakes no obligation to update or revise any forward-lookingstatements.